Management reiterated that their De Novo DrugSorb-ATR submission continued to be in interactive review with FDA, that their Medical Device License application to Health Canada was in advanced review, and that they continue to expect regulatory decisions in 2025. Meanwhile, CytoSorbents (NASDAQ:CTSO) has begun some premarket launch planning, including engaging with leading U.S. and Canadian key opinion leaders, recruiting key talent, and proceeding with market access activities, including developing a clear value proposition for patients, surgeons, and hospitals. The company also disclosed that if DrugSorb-ATR is approved, it plans a controlled market release to key clinical trial centers for several months prior to a broader national launch.
In addition, the company detailed a April and May 2025 scientific conference schedule and data presentations on the use of its technology to reduce perioperative bleeding in CABG patients due to Brilinta. These included American College of Cardiology, Society of Cardiovascular Anesthesiologists, EuroPCR, Canadian Society of Cardiac Surgery, and the European Society of Cardiology Heart Failure.
4th Quarter 2024 Financial Results
On March 31, 2025, CytoSorbents reported 4th quarter and full year 2024 results. In the 4th quarter, product revenue was $9.2 million, which was an increase of 25% compared to $7.3 million in the 4th quarter of 2023. Grant income was $1.0 million compared to $1.3 million in the prior year period. The company reclassified its financials to report grant income as a reduction of related R&D expenses. Historically, grant income has been reported as a component of revenue and cost of revenue, as well as a reduction of the related research and development expenses. The company will now report grant income solely as a reduction of related research and development expenses. If the company had continued its historical reporting, total revenue in the 4th quarter would have been $10.1 million, an increase of 17% compared to $8.7 million in the prior year period.
Product gross margin increased to 71% compared to 68% in the 4th quarter of 2023. Operating loss improved by 61% to ($3.7) million compared to ($9.6) million in the prior year period. This was driven by higher revenues and a 30% reduction in operating expenses. Net loss was ($7.6) million or ($0.14) per share, which compares to a net loss of ($6.1) million or ($0.13) per share in the 4th quarter of 2023. Adjusted net loss (which eliminates stock comp and currency translation items) improved by 78% to ($1.7) million or ($0.03) per share, compared to ($7.8) million or ($0.17) per share in the prior year period. Adjusted EBITDA loss improved by 70% to ($2.4) million compared to a loss of ($8.1) million in the 4th quarter of 2023.
The revenue reclassification eliminates potential confusion by investors regarding product gross margins compared to overall company gross margins. Those items will now be the same going forward.
CEO Dr. Phillip Chan stated, “We believe we have a clear and compelling value proposition. Our core business grew 15% in 2024 with more than $35 million in high-margin CytoSorb sales, driven by 28% growth in direct sales outside of Germany and 22% growth in Distributor/Partner sales, which was partially offset by flat growth in direct sales in Germany for the year.”
Liquidity and Capital Resources
As of December 31, 2024, the company had current assets of approximately $21.6 million and current liabilities of approximately $9.8 million. Cash balance at year-end was $9.8 million including $3.3 million in unrestricted cash and restricted cash of $6.5 million.
However, pro forma total cash when considering the rights offering and the exercise of the Series A Right Warrants as if they had occurred on December 31, 2024 is approximately $17.0 million. We believe total cash as of the date of this report is in the $13-14 million range.
We believe the company is fully funded to support its business model through the expected regulatory approval of DrugSorb-ATR and the subsequent commercial launch in 2025 or early 2026.
Valuation and Estimates
Our 2025 product revenue estimate is adjusted to $37.4 million, and our 2025 EPS estimate is adjusted to a loss of ($0.25) per share based on improved cost controls at the company and higher gross margins. We believe 2026 revenues could exceed $42.0 million with the approval and commercialization of DrugSorb-ATR. Our 2026 GAAP EPS estimate is a loss of ($0.10) per share.
With ongoing cost controls and the maintenance of gross margins above 70%, we believe the company could reach near cash flow breakeven at some point in the latter part of 2025.
Beginning in 2025, the company began a significant reorganization of the direct sales team and strategy in Germany. This includes the rebalancing of territories and hospital accounts with the goal of restoring sales growth through deeper customer engagement, more effective market development, and improved sales representative productivity. This process may cause a short-term disruption in Germany sales that will result in slightly lower product sales overall in the 1st quarter of 2025 compared to the prior year period. However, these actions should produce improved sales results in the 2nd half of 2025 with the goal of moving the core business toward cash flow breakeven.
Last year, the company implemented significant cost-cutting measures to reduce the cash burn, including major reductions in headcount, termination of non-core R&D programs, termination of the STAR-D trial to focus on STAR-T, and a third consecutive year of salary freezes for executive management, with management voluntarily reducing salaries in exchange for stock options in 2024. The benefit of these cost cuts on operating expenses have been apparent in the significant cash burn reduction for the past two quarters.
In addition, the company has worked diligently to optimize manufacturing efficiencies. The company had product gross margins of 71% in 2024 and expects product gross margins to be more consistently in the mid-high 70% range after full commercialization of DrugSorb-ATR in North American markets.
We remain confident the company can generate substantial levels of free cash flow over time, particularly if the approval and commercialization of DrugSorb-ATR is successful in 2025. We maintain our price target of $4.00 per share.
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